Lithium Americas secures US$2.26 billion DOE loan pledge

Lithium Americas Corp. [LAC-TSX, NYSE] said Thursday it has received a conditional commitment from the U.S. Department of Energy for a US$2.26 billion loan to finance construction of the processing facilities at its 100%-owned Thacker Pass lithium mine in Nevada.

The estimated total capital cost for Phase 1 construction has been revised to $2.93 billion, according to a construction update that was released on Thursday together with details of the U.S. government loan commitment.

The company said Thacker Pass supports the U.S. government’s commitment to securing a domestic supply chain for critical minerals to reduce reliance on foreign materials. It said Phase 1 production could support lithium needs for up to 800,000 vehicles annually.

Lithium Americas shares advanced on the news, rising 26.7% or $2.06 to $8.76 in early trading Thursday. The shares trade in a 52-week range of $17 and $5.17.

The loan is being made available under the Advanced Technology Vehicles Manufacturing Loan Program. Thacker Pass Phase 1 is intended to produce an initial 40,000 tonnes per year of battery grade lithium carbonate, creating approximately 1,800 direct jobs during the three-year construction period and 360 jobs in operations for its 40-year-mine life.

Based on the terms of the conditional commitment, the loan will have interest rates fixed from the date of each monthly advance for the term of the loan at applicable U.S. Treasury rates. The loan amount includes interest accrued during construction, which is estimated to be US$290 million over the three-year period.

The announcement comes one year after Lithium Americas and General Motors Co. [GM-NYSE] said they will jointly invest to develop the Thacker Pass, which ranks as one of the largest known sources of lithium in the U.S. and among the top five largest in the world.

General Motors said it would make a US$650 million equity investment in Lithium Americas, marking the largest-ever investment by an automaker for the production of battery raw materials.

“The loan plus GM’s strategic investment will provide the vast majority of the capital necessary to fund Phase 1,’’ said Lithium Americas President and CEO Jonathan Evans.

The Thacker Pass lithium project is located in Humbolt County, northern Nevada. The project is situated at the southern end of the McDermitt Caldera, approximately 100 kilometres north of Winnemucca.

Thacker Pass is targeting 80,000 tonnes annually of battery-quality lithium carbonate production capacity in two phases of 40,000 tonnes per year respectively.  Phase 1 production is expected to commence in 2027.

In the construction update, Lithium Americas said site preparation for major earthworks has been completed, including all site clearing, commissioning a water supply system, site access improvements and infrastructure. The company is currently focused on advancing detailed engineering, procurement and execution planning for the construction of Thacker Pass Phase 1.

The company said certain technical, legal and financial conditions, including negotiation of definitive financing documents, must be satisfied prior to funding of the loan.